Serbia has just changed its current arrangement with the International Monetary Fund (IMF). From the standby contract, which is by nature more binding, control and financial, because it also involves taking their money, we switched to a “softer”, advisory one, as a precaution, which does not foresee taking their funds. This was agreed during the recent second “control” of the implementation of the goals.
Since 2014, almost ten years, we have some kind of arrangement with this international financial institution. It is curious that in the past year we even changed the nature of the already concluded arrangement twice. First, in December 2022, we replaced the advisory arrangement with a standby arrangement, and now we have returned to it again.
Mihailo Gajić from the non-governmental organization LIBEK (Libertarian Club) says that so far we have fulfilled the set goals, even more than that, because the deficit will be smaller than planned, and that is what they are most interested in.
“From the announcement of the IMF, which is always worded diplomatically, it can be seen that they have only two major goals set out here. The first is fiscal sustainability, that the deficit be low and that the public debt does not grow. The opposite would mean that the state would be in trouble if it could not settle its obligations to international creditors. Another thing they are interested in is the energy sector. Its “jumping out”, as with EPS, when the thermal power plant stopped working, due to which “Srbijagas” consumed more gas than planned at high prices, requires support for those companies. This would mean high budget subsidies again”, says this economist.
He adds that we had a slightly higher increase in public revenues than was foreseen in the original budget, and additionally the government has committed itself to compensate for the increase in public expenditures, such as subsidies for farmers, with an increase in the excise tax. So, not only the increase in public expenditures will be transferred to the next year, but also the increase in income that will finance it.
And the fact that we are not taking additional money from the IMF is a signal to investors that we are in a better situation and that we will be able to borrow at lower interest rates.
